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“WHEREAS the survival of these two remaining producers is now in jeopardy due to recent increases of over three hundred per cent in the cost on the world market of their basic raw material, to wit: molasses; and

“WHEREAS it is clearly in the best interest of all of the people of all of the Virgin Islands, necessary to finance the operations of hospitals, schools, and other essential public functions, and essential to the financial survival of the Government of the Virgin Islands, under the fiscal formula established by the Revised Organic Act for the Virgin Islands, Public Law 517, 83rd Congress, dated July 22, 1954, that every possible financial assistance necessary to insure the continued survival of these two producers, or others in thelr stead, should be given at the earliest practical date ; and

“WHEREAS the most equitable, feasible and desirable means of rendering this industry the necessary financial assistance is through the medium of a molasses subsidy to be provided by the Government of the Virgin Islands to the rum-producing industries concerned."

The Revised Organic Act, approved July 22, 1954, referred to in the above quoted preamble, is set out preceding Title 1. $ 4202. Procedure for paying out monies from fund

Monies from the fund shall be paid out to established industries engaged in the processing of molasses into rum within the Virgin Islands of the United States during the calendar year 1956 in accordance with the following formula and procedure:

(a) The molasses processing industry shall notify the Commissioner of Finance of each proposed importation of molasses to be imported into the Virgin Islands at least 10 days in advance of date on which delivery of shipment is anticipated to be made. This notification shall include information as to the approximate number of gallons in the shipment and the estimated cost of same.

(b) Upon receipt of the notification called for in paragraph (a) of this section, the Commissioner of Finance shall forthwith proceed to allocate and establish within the fund, from appropriations to be made from time to time by the Legislature, monies sufficient to cover the amount of the subsidy to be granted the industry-purchaser plus a reasonable margin of funds to cover any contingent costs.

(c) The industry-purchaser shall, as soon as possible after receipt of molasses shipment, submit certified vouchers to the Commissioner of Finance covering the total C.I.F. cost of the molasses purchased.

(d) The Commissioner of Finance shall, upon receipt of certified vouchers from the industry-purchaser, verify the correctness of same and thereupon, but in any event not more than three days after receipt of same, make payment of the proper subsidy to the industry-producer who shall have applied for same.June 11, 1957, No. 197, 8 3.

Repeal: Repeal of all laws in conflict with this section, see note under section 4201 of this title.

Cross references : Appropriation, see note under section 4201 of this title. 84203. Amount of subsidy

The molasses subsidy referred to in section 4202 of this title shall be determined as follows:

(a) In the case of molasses purchased from sources within the Virgin Islands the subsidy shall be the differential between seven cents (U.S.) per gallon and the purchase price per gallon F.O.B. seller's pipeline.

(b) In the case of molasses purchased from sources outside the Virgin Islands, the subsidy shall be the differential between seven cents (U.S.) per gallon and the total cost per gallon to the industry-purchaser delivered in the first place of storage within the Virgin Islands which total cost shall be the C.I.F. Virgin Islands cost, including, where applicable, any duties and other verifiable costs of placing said molasses into first Virgin Islands storage facility.—June 11, 1957, No. 197, § 4. " ; Repeal : Repeal of all laws in confict with this section, see note under section 4201 of this title. 8'4204. Verification of amount of subsidy due

The Commissioner of Finance shall be empowered to require from any manufacturer claiming subsidies under the provisions of this chapter any and all vouchers, statements, certificates, consular invoices, or other pertinent documents as he may consider necessary and proper for effectively verifying and determining the exact amount of each and every subsidy claimed. The Commissioner of Finance is likewise authorized whenever deemed necessary, and in the interest of the Government of the Virgin Islands, to inspect all business records of persons or firms claiming or granted subsidies under the provisions of this chapter.—June 11, 1957, No. 197, 8 5.

Repeal : Repeal of all laws in conflict with this section, see note under section 4201 of this title. 8 4205. Use of molasses purchased with subsidies

(a) All molasses purchased under this subsidy program shall be converted into rum by an established rum-producing industry within the Virgin Islands.

(b) The calculated subsidies shall be based upon blackstrap molasses with sugar content of not more than 55%

(c) All rum produced from molasses subsidized under the provisions of this chapter shall be exported to the United States, except such quantities as are normally disposed of in the course of trade within the Virgin Islands.

(d) Any deviation from this provision of the law shall cause the responsible industry-producer to be subject to forfeiture of all subsidies granted under provisions hereof.

(e) In order to ensure a prompt compliance with this provision, each industryproducer receiving a subsidy under this program shall file a quarterly statement on the 15th day of January, April, July and October. of each and every year hereafter in which a subsidy is granted showing the use and disposition of all molasses purchased under this subsidy program.-June 11, 1957, No. 197, 8 6.

Repeal : Repeal of all laws in conflict with this section, see note under section 4201 of this title. & 4206. Allocation of subsidies among producers

For the period from March 1, 1957, until June 30, 1958, the aforementioned subsidy shall be granted to the molasses-processing rum-producing industries in the Virgin Islands, apportioned to the rum-producing industries on the basis of the gallons of molasses processed by them into rum in accordance with the proportions established under their agreement with the Virgin Islands Corporation. The total quantity of molasses to be subsidized under this program shall not exceed 1,200,000 gallons.-June 11, 1957, No. 197, 8 7.

Repeal: Repeal of all laws in conflict with this section, see note under section 4201 of this title. 8 4207. Penalties

Any person who shall wilfully or knowingly present any false claims for subsidies under the provisions of this chapter with intent to defraud the Government of the Virgin Islands of monies authorized to be disbursed by the Commissioner of Finance for emergency assistance to the said industries shall be guilty of a felony and, upon conviction therefor shall be punished by a fine not to exceed $20,000 or imprisonment for not more than 10 years, or both.—June 11, 1957, No. 197, 8 8.

Repeal: Repeal of all laws in conflict with this section, see note under section 4201 of this title.

(Rum-Producing Industries Subsidy repealed by the Act of July 7, 1958. Repeal effective January 1, 1959.)





... Washington, D.C. The committee met, pursuant to call, at 2:15 p.m. in room 3110, Sonate Office Building, Hon. Clinton P. Anderson (chairman) presiding. . . .

Present: Senators Clinton P. Anderson (New Mexico), Ernest Gruening (Alaska), Oren E. Long (Hawaii), Quentin N. Burdick (North Dakota), Lee Metcalf (Montana), J. J. Hickey (Wyoming), Henry Dworshak (Idaho), Hiram L. Fong (Hawaii), and Jack Miller (Iowa).

The CHAIRMAN. The committee will come to order. This is a continuation of the hearings begun on March 10 on the nomination of Ralph Paiewonsky to be Governor of the Virgin Islands..

Mr. Bailey, please come forward.. ,,Mr. Bailey, state your name and any positions you have held with political parties, or in your profession what your work is.. STATEMENT OF WILLIAM W. BAILEY; ATTORNEY, ST. THOMAS, V.I.

Mr. BAILEY. Thank you, sir. My name is William W. Bailey. I am a counselor at law, admitted in the State of New York and in the Virgin Islands.

I am a past president of the Virgin Islands Bar Association and former Republican State leader of the Virgin Islands.

The CHAIRMAN. Do you have a statement you wish to make? :: Mr. BAILEY. I have no written statement, sir, but I did come up here voluntarily because of a headline that I saw in the San Juan Star, I believe it was Saturday morning, which stated that Mr. Ralph Paiewonsky, whose name is before this committee, had been accused of being a tax cheat.

I thought it was important enough as a citizen, and I am here as a privato citizen only, and not in any official capacity, to come at least and make some sort of a statement in refutation of what I read in the papers.

I have lived in the Virgin Islands for about 15 years now, having gone there from Westchester County, N.Y., where I formerly lived and practiced, and I actively practice law there. I have tried to engage in community affairs as much as my ability would allow.


In the course of my work down there, I have known Mr. Ralph Paiewonsky from my business and legal associations only. I do not represent him. I have never represented him. I know him only through community activities, such as the chamber of commerce, the community chest, Red Cross, and other things on which we have worked together for a common purpose for the islands.

The CHAIRMAN. May I just stop you there?

You say you never represented him. Do you include in that the firms with which he is identified ?

Mr. BAILEY. I have never represented him, any member of his family, or any firm, corporation, or business in which he or his family are engaged.

On the contrary, I have represented, as a matter of fact, two or three clients who have bought land from the Paiewonskys, so I have been on the other side of the fence. I might say that in the entire time I have lived and worked in the Virgin Islands I have always found Mr. Paiewonsky's character to be of the highest, and I certainly believe that in the present instance where he is being considered for the position of Governor of the Virgin Islands, that great emphasis should be put upon the fact that in selecting a helmsman, a captain, for the small ship of state known as the Virgin Islands down in the Caribbean Sea, that he is one of the best qualified to step into that position. - He was born there, he was raised there, he has been in business there. I know of no one in all of the islands who, in my opinion, has had a closer contact with all segments of the population, from the lowest to the highest. In all of the time that I have known him, I have never known anything questionable in his business dealings or his other dealings that should reflect unfavorably upon his qualifications for the office for which he has been nominated. · I might say that in my position as the Republican leader at one time in the Virgin Islands, a good deal of the information that I have read in the press in Puerto Rico and in the Virgin Islands, and I also have personally read the transcript of the testimony of this hearing, if I had known that any of that information was in the slightest degree true during the time I have been in the Virgin Islands, I am sure that my party would have been only too delighted, as well as the Unity Party, which are the two parties opposed to the Democratic Party down there, we would have been only too glad to have had the ammunition to have used in political campaigns and in other ways in the Virgin Islands.

I believe none of the information to be true. That is why I wanted to come here and say, as someone who has lived as a neighbor—I would say I am hardly even a friend of Mr. Paiewonsky's because I do not believe in my life he has ever been in my home as a neighbor in the samo town, to say that I know his character to be good and I am convinced that his abilities are sufficient to enable him well and ably, if he is confirmed, to carry on the office for which he has been nominated.

I believe him to be an excellent captain of our ship of state there, and certainly if this David, who has cast the stone at Goliath, in this case had something that was of benefit to us as Republicans in the islands, we would have long since used it. I say that because perhaps I am one of the few men in the Virgin Islands that has had any per

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